Business Expansion: Are You Doing it Right?
By: Karl R. LaPan, President & CEO, Northeast Indiana Innovation Center
For every successful business, there are many others that are no so successful. It’s true: it’s a challenging world out there for entrepreneurs and business owners. Those that make the cut face a unique set of challenges. With expansion, come growing pains. A little foresight could save you a great deal of time and frustration.
Yesterday, the Innovation Center celebrated its third annual signature event – Ideas@ Work Ideas@Work Landing Page. Our speaker JB Bernstein JB Questions, entrepreneur and co-creator of the Million Dollar Arm (movie and book written about him) shared at our event that entrepreneurs see what others can’t and that sometimes to win, you have to change the game. JB emphasized the importance of planning and execution and how to be confident and humble while not exhibiting overconfidence and being perceived as egotistical. He shared his system for thinking differently and how to apply intellectual curiosity to find novel solutions others don’t dream of — he replaced a judge and microphones from American Idol with a radar gun and a ball. He combined this with the sport of cricket in search of the first Indian pitchers for US Major League Baseball. In the process, he did his homework. He orchestrated the details. He knew why his idea would work when everyone in the world laughed or doubted him.
When doing your homework on expansion, be sure:
- You have accounted for start-up or scale up costs. Say you have a brick-and-mortar store and want to expand with a second location. You can’t effectively do this without investing more money in the venture. Depending on the nature of your business, you may have to spend significant upfront money on inventory or supplies. You may have to hire a staff and train them before you make any money off your second location. And don’t forget about marketing! How will customers will find you? You can’t depend solely on word of mouth. JB said in his talk yesterday it is not just about who you raise money from but how you use the money.
- You have a good handle on the lay of the land. Say you want to add another product or service to your menu of offerings. That might sound like a great opportunity on the surface, but you could be setting yourself up for failure if you’re unfamiliar with it. It’s best to learn how to sail before you go out in your boat. You can’t be everything to everyone, anyway. Focus and stay true to your core business as you identify interesting adjacent market or product opportunities.
- You have invested in customer discovery and customer validation. Say you want to open a second location or launch a new product because business is booming. Great, but do you know much about the competitive OR more importantly the customer landscape? Never assume you know the market unless you’ve done your homework. Read about business model canvas to understand better how to create a viable and robust business model.
- You have develop a back-up plan. What will you do if things don’t go as planned? An attorney can help you plan for the possibility of such an unfortunate event. Consider questions like: Who will be involved in the fix? What risks can be insured? What will you do next? Contingency thinking is essential to success.
If you have recently expanded, what do you wish you had done differently? We can all learn how to avoid costly lessons and big mistakes so I am excited to read your comments. Don’t forget, the Innovation Center can help your business succeed with our programs and services.